Voluntary Separations of employees (Employees who Leave their organization on their own) are Voluntary retirement ( Case Laws ) - Resignation
Voluntary separations means employees leaving or quitting an Organization on their own reasons but not for the decision made by their organisation . This type can be minimized through equitable compensation, benefits programs, and the creation of strong links between the employee and the organization. While some quits can be avoided, the circumstances surrounding many employee quits are completely beyond the control of the organization (e.g., the relocation of a spouse or a change in family dynamics or size).
1. Voluntary Retirement Scheme
When a company realizes that it needs to downsize its scale of operations, its first task is to examine alternatives to layoffs. One of the most popular of these methods is early or Voluntary retirement.
In case of voluntary retirement the normal retirement benefits are calculated and paid to all such employees who put in a minimum qualifying service Sometimes the employer may encourage the employees to retire voluntarily with a view to reduce surplus staff and cut down labor costs. Attractive compensation benefits are generally in built in all such plans (referred to as golden handshake scheme).
To reduce post retirement anxieties companies these days organize counselling sessions, and offer investment related services (e.g. Citibank , Bank of America) Some companies extend medical and insurance benefits to the retirees also e.g. Indian Oil corporation.
Voluntary retirement in case of Government servant
In India Any Government servant can apply for voluntary retirement, three months in advance, only after the completion of twenty years of his qualifying service, provided there is no vigilance or Departmental Enquiry pending /initiated against him/her.
Competent authority can reject voluntary retirement of an employee when there is vigilance or Departmental Enquiry pending /initiated against him/her.
Competent authority can reject voluntary retirement of an employee when his services are required or must.
The Fundamental Rule 56(c) give a right to say no to the government employee's request to the voluntary retirement if any departmental proceedings were pending or contemplated against him. (B.J Shelat v. State of Gujarat, AIR 1978 SC 1109.)
Supreme Court of India
Dinesh Chandra Sangma vs State Of Assam & Ors on 5th October, 1977
The court held that "there is no question of acceptance of the request for voluntary retirement by the government, when the government servant exercises his right under Fundamental Rule 56(c)." under the said rule, a government servant enjoys an option in the absolute terms to warrant a retired with three months previous notice after he reaches 50 years of age or has completed 25 years of service, and the consent of the government is not necessary to give legal effect to the voluntary retirement of the government servant.
Government unveils major changes in voluntary retirement rules
Bureaucrats seeking voluntary retirement can now hope to see their requests acted upon within a set time frame under new service rules unveiled by the Centre. The move to effect major changes in service rules for babus seeking voluntary retirement comes against the backdrop of complaints of harassment by few bureaucrats who claimed that their requests were kept pending for long time.
The new rules also allow bureaucrats to take back their voluntary retirement request.
The request for voluntary retirement by an IAS and IPS officers will not be kept pending beyond the notice period mentioned by them in such requests, according to the new rules issued by the Department of Personnel and Training (DoPT).
If the competent authorities don't issue any order before the expiry of the notice period specified by a service member, the voluntary retirement shall become effective from the date of expiry of the said period, the rules said. "Provided that, where no order is issued by the competent authority, then after the expiry of the period specified in the notice, the central government may issue orders."
Once Notice Of Voluntary Retirement Is Accepted, Employee Has No Locus To Withdraw Notice: Bombay High Court
Read judgment below
Gajanan s/o Siddappa Maitri Vs The Union of India and Others - WRIT PETITION NO.2442 OF 2019
Facts of the Case
The petitioner at the relevant time was working as a ClassII (Group B) Income Tax Officer, Ward Osmanabad Camp at Latur. The petitioner had
rendered 35 years of service. On or about 20.11.2017, the petitioner gave a notice/application for voluntary retirement from the post of Income Tax Officer. As per the notice of voluntary retirement dated 20.11.2017, the petitioner intended to retire with effect from 28.02.2018. The petitioner on or about 17.03.2018 gave an application for withdrawal of notice of voluntary retirement. The petitioner was informed that the application for voluntary retirement submitted by the petitioner is accepted.
Court held that
"The government employee will have locus poenitentiae to withdraw his request for voluntary retirement before the intended date of retirement and not thereafter. On the lapse of intended date of retirement, the relationship of the employer and employee would come to an end.
In the present case, the employer has accepted the notice of voluntary retirement on March 9, 2018 and had also issued an office order relieving the petitioner from service and for the first time the petitioner issued a letter withdrawing his notice of voluntary retirement on March 17, 2018. On the said date, the petitioner did not have locus to withdraw his notice of voluntary retirement as the relationship of an employer and employee came to an end."
Right To Retire Can’t Be Supreme Than Right To Life, SC Upholds UP Govt Decision Denying Voluntary Retirement To Doctors
Supreme Court of India
State of UP vs. Achal Singh
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 8421 Of 2018
(Arising out of S.L.P. (Civil) No.12601 of 2018)
Read Judgment below
‘In case all the doctors are permitted to retire, in that situation, there would be a chaos and no doctor would be left in the Government hospitals, which would be against the concept of the welfare state and injurious to public interest.’
The Supreme Court has held that denial of voluntary retirement is permissible under the rules applicable in the State of Uttar Pradesh when services are required.
The bench of Justice Arun Mishra and Justice S Abdul Nazeer observed that when there is a requirement of the services of an employee, the appointing authority may exercise its right not to accept the prayer for voluntary retirement.
The Issue The issue (in State of UP vs. Achal Singh) before the bench, while considering an appeal against the Allahabad High court judgment, was whether under Rule 56 of the Uttar Pradesh Fundamental Rules as amended, an employee has unfettered right to seek voluntary retirement by serving a notice of three months to the state government or whether the state government under the explanation attached to Rule 56 of the Fundamental Rules, is authorised to decline the prayer for voluntary retirement in the public interest under clause (c) of Rule 56 of the Fundamental Rules as applicable to the State of Uttar Pradesh.
“The Government may fill the vacancies if any. But that would not bring doctors of experience at senior level and exodus of doctors cannot be permitted to weaken the services when the public interest requires to serve for the sake of efficient medical profession and fulfil Directive Principles of State Policy once they found statutory expression in the rules cannot be made mockery. When services are required, denial of voluntary retirement is permissible under the Rules applicable in the State of Uttar Pradesh.”
Central Government Employee? No Pension after resignation when VRS is denied – Supreme Court of India.
Read judgment below
As per the Central Civil Service rules, an employee cannot claim pension after resigning from job. The number of years served by such an employee will become irrelevant for consideration of pension if the employee resigns. CCS Rules says that an employee forfeits his past service by resigning from a service or a post. On Thursday, the Supreme Court also upheld this rule in its judgement in BSES Yamuna Power Ltd Vs Ghanshyam Chand Sharma & Anr.
Ghanshyam Chand Sharma (respondent) was appointed as a daily rated mazdoor on 9 July 1968. His services were regularised on the post of a peon on 22 December 1971. Sharma tendered his resignation on 7 July 1990, which was accepted by the appellant (BSES Yamuna Power Ltd) with effect from 10 July 1990. Subsequently, Sharma was denied pensionary benefits on two grounds: First, he had not completed twenty years of service, making him ineligible for the grant of pension. Second, Sharma had forfeited his past services by resigning and therefore could not claim pensionary benefits. Sharma had challenged the order before Single Judge Bench of Delhi High Court, which granted him pensionary benefit. The Single Judge’s decision was also upheld by a Division Bench of the High Court.
Sharma had applied for voluntary retirement on 14 February 1990. This was denied by BSES Yamuna by a letter dated 25 May 1990 on the ground that he had not completed 20 years of service. Sharma challenged this decision arguing he had completed 20 years of service. However, the apex court said, “This argument cannot be accepted. Even if he was denied voluntary retirement on 25 May 1990, the first respondent did not challenge this decision but resigned, on 7 July 1990. The denial of voluntary retirement does not mitigate the legal consequences that flow from resignation.”
The top court ruled that in this case, the denial of voluntary retirement cannot be invoked to claim pensionary benefits.
Ground realities behind the voluntary retirement of employees from organisations
Voluntary retirements at General Motors India.
General Motors, which decided to stop selling vehicles in the Indian market from year-end, has given its employees here less than a month to opt for a voluntary separation scheme (VSS) as it starts winding down operations in the country.Nearly 250 people in marketing, sales, finance and administration are likely to be given golden handshakes
The company offered compensation of "45 days salary for every year of completed year of service or part thereof in excess of six months" in normal cases.On the other hand, for those who are nearing retirement, GM offered employees compensation of "monthly salary multiplied by the remaining months of service till normal age of retirement". The minimum compensation payable eligible shall be three months salary.
Tata Motors Wants To Reduce Workforce By 50%; Offers VRS
To reduce cost, Tata Motors has offered a voluntary retirement scheme (VRS) to its employees for the third time in the last five years being part of its turnaround plan. Earlier to this, Tata Motors had announced voluntary retirement scheme in the year 2015 and 2017.
The voluntary retirement scheme gives an opportunity for permanent employees by drawing certain employee compensation and benefits. The employee compensation and benefits offered under the voluntary retirement scheme are the best amongst in the industry and include employee health insurance as well as guidance on retirement planning.
Considering the expenditure of Tata Motors, it spends 8-10 percent of its cost on employees.If we compare Tata Motors with Maruti Suzuki India, then it has around 30,000 employees (regular employees + contract employees) in total.
Tata Motors aims to cut costs via voluntary retirement scheme for executives
In the first major move under N Chandrasekaran's chairmanship, Tata Motors reduced staff by offering a voluntary retirement scheme (VRS).
The company targeted 400-500 executives through the scheme. This was perhaps the biggest white-collar workforce rationalisation to be undertaken by the over seven-decade-old company. The company , the country's largest automaker by revenues, had been offering VRS on and off to its employees, with the last one being taken up by 250-odd factory workers in 2015-16. That year, it had incurred an employee separation cost of Rs 10 crore.
Tata Motors resorted to this extreme step again to reduce costs and to streamline its operations after losses widened at its local unit.
Tata Motors offers VRS to cut costs on weak demand.
Tata Motors, the country's largest auto maker by revenue, cut staff by offering a voluntary retirement scheme (VRS) to reduce costs as weak demand and shrinking market share pressure it to streamline its Indian operations. The Tata Group flagship, one of the oldest automobile companies in India, employs about 27,000 people in the country as on 2015.
Describing the VRS, being offered to all categories of employees, as a 'people initiative', Tata Motors said that through this the company's India operations would "enhance its competitiveness" in a fiercely competitive market. Unlike the usual VRS that entails a one-time payment, the seven-decade old company is offering an attractive package which includes a monthly salary comprising basic and dearness allowance that begins on the date of separation till the employee turns 60. While for employees, this ensures an assured monthly income, for the company it will help avoid taking a one-time financial knock on its books.
The scheme also offers a medical insurance cover for a period of 10 years post separation and normal retirement benefits such as provident fund, gratuity, superannuation, encashment of un-availed leaves and leave travel assistance due but not claimed.
The people initiative will complement the strong product portfolio it has announced till 2020, including the launch of two new products every year for its passenger vehicle business, and several new products and variants for its commercial vehicles business, Tata Motors said in a statement.
5,000 employees opt for Voluntary Retirement Scheme at Nokia Chennai factory
INDIA (CHENNAI): Nearly 5,000 of the 6,600 permanent employees of handset manufacturer Nokia plant at Sriperumbudur near here have opted for the Voluntary Retirement Scheme (VRS) announced by the company last month. Nokia India Employees Union sources told that the employees who had opted for the scheme, which entitles a benefit of around Rs 2 lakh, did so out of fear of job loss. "About 5,000 people have left the company. Actually, they were not interested to leave. But out of fear of losing the job later without even the VRS compensation, they opted for the VRS," they claimed.
The Finnish company last month sold its mobile unit to software major Microsoft but the plant near Chennai ran into rough weather over tax disputes between Centre and state governments. The company, which aimed to support the employees over the uncertainty of their future, announced the VRS scheme at the Chennai factory last month. In its statement , Nokia said it has introduced "several" new initiatives under the Bridge programme to provide support to the employees which include -- working with industry experts to identify new employment areas, conducting awareness programmes in 40 locations in Tamil Nadu including Chennai. "The awareness sessions is to share information and insight into over 30 different skill development modules and employment outlook trainings across industries like garment, automotive, retail, hospitality," it said. The Bridge programme is also aimed at inviting employers to "facilitate engagement and placements", it said. Through the Bridge programme, Nokia said, globally about 18,000 employees have benefitted. By PTI | 15 May, 2014, 12.10AM IST
MTNL offers VRS to about 20,000 employees
MAY 2012, INDIA, MUMBAI: State-owned MTNL, which provides telecom services in Delhi and Mumbai regions, offered voluntary retirement scheme (VRS) to about 20,000 employees, as part of its efforts to turn profitable. MTNL had suffered a loss of Rs 929.7 crore for the quarter ended December, 2011.
Retirement is the point where a person stops employment completely.A person may also semi-retire by reducing work hours.
Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to work any more (by illness or accident) or as a result of legislation concerning their position. In most countries, the idea of retirement is of recent origin, being introduced during the 19th and 20th centuries. Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Germany was the first country to introduce retirement in the 1880s.
Nowadays most developed countries have systems to provide pensions on retirement in old age, which may be sponsored by employers and/or the state. In many poorer countries, support for the old is still mainly provided through the family. Today, retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right. In many western countries this right is mentioned in national constitutions.
Retirement in specific countries
2. Transfer by request
Employee transfer is the process of shifting an employee from one workplace to other workplace or from one office to another office without changing his role or position in his job which means duties would remain same in next place of posting. But some may get confused with job rotation which is the process of moving employee from one workplace to other workplace or from one job to other job by changing his role or responsibilities, but without changing his grade or category or position in the job. Employee transfer is a routine process which we can be frequently seen in the government organisations and also in private organisations which have multiple batches or offices.
The concept or purpose of employee transfer is to make an employee not to create undue influence or get undue influence at his/her place of work, which would be happened if an employee is retained for a longer period in a particular place of work.
In some cases employees seek voluntary transfer from his place of work because of personal reasons like, if an employee is working in a distant place which is away from family members or sometimes for providing better education to their children in places where best best education is available or to stay near with their old-age parents to support and look after them or for providing better medical treatment. In such situations employees seek transfer by request to the place where his/her family resides.
An employee decides to resign when his or her level of dissatisfaction with the present job is high or a more attractive alternative job is awaiting the individual. The reasons for dissatisfaction may be because, of the job itself or because of job extrinsic factors such as supervision, company policy, compensation advancement opportunities, health, spouse relocation and the like.
Thanks to economic boom, jobs are available in plenty. Competent people will get multiple offers in given time. Some of them stay with the organization in the name of loyalty or some other commitment Majority accept the more attractive offers and prefer to leave the company.
Depending on the employee's reason, comfort with the employer, and dedication to the job, resignation may be sudden and unexpected without warning to the employer, or with a certain amount of notice given. Generally, employers prefer that a departing employee provide at least some notice to the employer, often at least two weeks, this often called a two-weeks notice. Those in compliance with this requirement are more likely to be rehired by the same employer in the future, to receive their full benefits from the employer, and to get a better reference for future employers.
Resignations are seen more in information technology industry mainly by women employees. As per the research on quits of woman employees, the reasons identified were marriages, pregnancy, child care after birth and family care responsibilities.
Gratuity Payable On Resignation of employee After 5 Years Of Continuous Service: Supreme Court of India
Read judgment below
The Court was considering an appeal filed by Rajasthan State Road Transport Corporation Ltd. against the High court judgment which had allowed the writ petition filed by the wife of a deceased employee claiming the retiral benefits.
After his application seeking voluntary retirement was not acted upon, the employee had submitted his resignation as he claimed to be under depression and his health condition had further deteriorated. This resignation was accepted. It was after he died, his wife approached the High Court. The High Court directed to treat it as voluntarily retirement and release the retiral benefits to which he was entitled.
Allowing the appeal, the bench observed that pending disciplinary proceedings if an application for voluntary retirement is submitted there would be no absolute right seeking for acceptance since the employer if keen on proceeding with the inquiry would be entitled not to consider the application for voluntary retirement. However, the bench observed:
" As rightly pointed out by the learned counsel for the respondents, Section 4(1)(b) of the Payment of Gratuity Act, 1972 provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well. In that view, if the gratuity amount has not been paid to the respondent's husband, the liability to pay the same would subsist and the respondent No. 1 will be entitled to receive the same in accordance with the provisions of the Act. In that regard it is directed that the appellants shall accordingly calculate the gratuity and pay the same to the respondent No. 1, if already not paid. Such payment shall be made within four weeks from this date"
Rights and Limitations Of An Employee To Withdraw Resignation: Supreme Court of India Explains
Read judgment below
In Air India Express Limited vs. Capt. Gurdarshan Kaur Sandhu, the Supreme Court discussed the rights and limitations of an employee withdrawing the resignation tendered by her.
Gurdarshan who was working as a Captain in Air India Charters Limited submitted her resignation on 3”* July 2017. On 2nd September 2019, the resignation was accepted by the employer. Three months later, she intimated the employer that she is withdrawing her resignation. The employer refused to accept this withdrawal of resignation letter on the ground that the resignation had become effective from 03.07.2017 by virtue of its acceptance on 02.09.2017 and thus she stood released from the services of the Company w.e.f. 02.01.2018 (i.e. on completion of six months notice period w.e.f. 03.07.2017). The Employee challenged this action before the High Court which allowed her plea on the ground it was open for him to withdraw the same prior to the expiry of the period of notice.
The Apex Court bench comprising of Justice Uday Umesh Lalit and Justice Vineet Saran, while considering the appeal filed by the employer, noted that there are two exceptions to the general rule that an employee who had tendered resignation would be well within his rights to withdraw the resignation before such resignation had become effective. As stated in constitutional bench judgment in Union of India and others v. Gopal Chandra Mishra, they are: "in the absence of anything to the contrary in the provisions governing the terms and conditions of the office/post" or "in the absence of a legal contractual or constitutional bar, a 'prospective resignation' can be withdrawn at any time before it becomes effective". Further exception as stated in Balram Gupta v. Union of India is: "If, however, the administration had made arrangements acting on his resignation or letter of retirement to make other employee available for his job, that would he another matter."
The bench, examining the facts of the case observed that it would fall in the exceptions illustrated in the judgments mentioned supra. The court noted that the stipulation of notice period is only to sub-serve public interest and is designed to enable the air transport undertaking or employer to find a suitable replacement or a substitute. The normal principle that an employee can at any time before the resignation becomes effective, withdraw his resignation will be subject to the core principles of the CAR, the bench observed while setting aside the High Court judgment.
Right and Limitations Summarized.
The legal position is that the general principle that the employee is entitled to withdraw her resignation before it become effective is not applicable if there is any stipulation to the contrary in the provisions governing the terms and conditions of the office/post. Further, a 'prospective resignation' cannot be withdrawn if there is a legal contractual or constitutional bar. Yet another factor which may dilute the general principle is when the administration had made arrangements acting on his resignation or letter of retirement to make other employee available for his job, that would be another matter. In a recent judgment, the Supreme Court had held that the unrestrained choice of an employee to withdraw a resignation may yet be constrained if the employer had made arrangements acting on the resignation or letter to make another employee available for the job.
A non-compete agreement is a document signed by an employee agreeing that, should the employee choose to leave the company, he or she will not work for a competitor for a specified period of time. Non-competes are used when employees have access to critical information. The legality of non-competes depend on state laws, the scope of the restrictions, and precedents set in court decisions.
Most executives cited the lack of challenges or opportunity for career growth, rather than inadequate compensation, as the main reason they left their last job, according to a recent survey by executive search firm Korn/Ferry International. Twenty percent cited ineffective leadership, while 17 percent said the attractive job market was why they left their last jobs.
An employee giving his or her two-week notice of resignation usually comes with little surprise. According to an article by Entrepreneur magazine, early warning signs include more personal phone calls, closed office doors and increased sick days. Other signs: the often vocal employee suddenly becomes passive, a normally quiet employee gets loud, and an employee who suddenly seems happy.
Severance package is a pay and benefit given to employees by the employer when they leave employment from company. Severance packages are most typically offered for employees who are laid off or retire. Severance pay was instituted to help protect the newly unemployed. Sometimes, they may be offered for people who resign, regardless of the circumstances; or are fired. Policies for severance packages are often found in a company's employee handbook, and in many countries are subject to strict government regulation. Typically, severance pay amounts to a week or two of pay for every year that the employee was with the company. Executives may receive a month's pay for each year of service and senior executives generally receive severance pay as outlined in the employment contract. In addition to pay, severance packages can include extended benefits, such as health insurance and outplacement assistance to help the employee secure a new position.
Severance contracts often stipulate that the employee will not sue the employer for wrongful dismissal or attempt to collect on unemployment benefits, and that if the employee does so, then they must return the severance money.
Potential new-hires are increasingly negotiating severance packages and outplacement assistance as a condition for accepting job offers, according to a U.S.A Today article. Executives are likely to negotiate these employment terms but the practice is spreading down through the ranks. Career experts agree that this form of negotiation was once considered bad form but is now generally accepted. The basic idea behind this concept is to help the employee at the time of need. When the employee is laid off, his monthly income ceases all of a sudden. The situation becomes still worst if the employee has a family dependent on him! Many people have faced this awful situation during the time of recession. However, if the person is on the severance package, he may avail the benefits that will help him to cope up with the ill situation. Severance agreements are more than just a "thank you" payment from an employer. They could prevent an employee from working for a competitor and waive any right to possibly pursue a legal claim against the former employer. Also, an employee may be giving up the right to seek unemployment compensation. It is important to review a severance agreement carefully and contact an employment attorney to assist with the review.
Due to pregnancy and motherhood
Countries like in India, where woman after her marriage gives most importance to their husband and children. Women getting pregnant after marriage is most happiest moment and gives them great respect especially according to Indian traditions and beliefs. Indian woman gives at most importance to motherhood and pregnancy time till delivery by sacrificing her personal life including her career and job . According to the article published in Times of India, vast number of working women in India and dropped out of work, in most cases because of pregnancy and motherhood. In SAP company in the year 2007, 61 employees went on maternity leave and only 19 stayed back. In the year 2012, 134 women employees went on maternity leave and 128 return to work.
Due to this many Indian companies are coming up with different unique perks especially meant to pregnant women for retaining talent.
Google India offers a baby bonding benefit of Rs. 13,650/- (around $ 250) to young mothers soon after their child is delivered.
Few companies are offering cab facility to pick and drop pregnant women from home to office.
Few companies are providing assistants in the office to pregnant women.
At Delhivery (Delhivery private limited is India's largest and most profitable fulfilment and logistics company for digital commerce and order/waybill tracking.), apart from availing of six months of paid maternity leave mandated by the government, new mothers can get an additional six months of unpaid leave.
Financial services startup Zerodha has work-from-home options for its technology team, which women can use if they have complications during pregnancy. The company also lets them extend their maternity leave to nine months.